Scotiabank bets big that NHL partnership will lure new customers

Scotiabank, NHL partnership a strategy to lure young hockey lovers to bank

Asked whether he’s a fan of hockey, Canada’s national pastime, Bank of Nova Scotia Chief Executive Officer Richard Waugh reached into his wallet and produced a pair of cards.

They don’t display Sidney Crosby’s goals or Alexander Ovechkin’s assists. One is a Visa credit card featuring the logo of the National Hockey League’s Toronto Maple Leafs; the other is a debit card declaring him a fan of his hometown Winnipeg Jets.

Scotiabank expects about one million customers to follow Waugh’s lead, part of a marketing strategy designed to get younger customers in the door of Canada’s third-largest bank buying mortgages, credit cards and other products. The NHL is looking to replicate the strategy with a bank in the U.S.

“This is a game changer for us,” Waugh, 64, said in an interview last month in Saskatoon, Saskatchewan. “We’re trying to focus on what’s important in people’s lives, and then making sure we can motivate them to take products and services from us.”

One million customers is the benchmark Scotiabank reached with its Scene campaign — a movie theatre-themed loyalty card used by about 3.5 million Canadians. Scotiabank has 19 million customers in about 50 countries, according to its website.

“Scene was mostly on theatre, but hockey is even more part of Canada and also a wider demographic,” said Waugh. In Canada, “a large segment of the population watches or goes to see hockey.”

Related

The hockey card campaign is “on pace to perform as well as the SCENE credit card program,” said Duncan Hannay, a senior vice president of Canadian marketing at the bank. Scotiabank said it has also been testing debit cards “on a limited basis in select markets.”

Waugh named Scotiabank ‘Canada’s Hockey Bank’ after it renewed in January an exclusive five-year sponsorship deal to be the official bank of the NHL. In addition, Scotiabank sponsors NHL teams in Toronto, Ottawa, Calgary and Winnipeg, with naming rights to the hockey arenas in Ottawa and Calgary. It’s also the bank of the NHL Players Association, NHL Alumni and the Canadian Women’s Hockey League.

John Aiken, an analyst at Barclays Capital in Toronto, questioned whether the hockey-themed marketing push can translate into real sales.

“One million seems like a fairly large number,” Aiken said. “It then becomes a question of ‘what’s the ability to be able to mine these customers and add products?’”

Hockey, Donuts

Mark Vandenbosch, a Kraft Professor in Marketing at the Ivey School of Business in London, Ontario, said hockey is something a wide cross-section of the Canadian public can relate to. “Scotiabank being involved in something that is truly Canadian is a good idea,” he said.

Vandenbosch likened the bank’s association with hockey to a long-standing association that coffee and donut chain Tim Hortons Inc. has with the sport in Canada.

Scotiabank isn’t the only Canadian bank involved in sports sponsorship. Royal Bank of Canada, the country’s largest bank, has alliances with the Olympic Games and the Professional Golfers’ Association, while No. 2 Toronto-Dominion Bank has its logo on the TD Garden in Boston, home of the NHL’s Boston Bruins and National Basketball Association’s Boston Celtics.

While hockey may have more appeal to males, women are also being targeted by the NHL, said Vijay Setlur, a lecturer on sport marketing at the Schulich School of Business in Toronto.

“Many of the pro leagues throughout North America are really reaching hard for that female consumer,” Setlur said in an interview. “There are more women at the games and watching the games than before. There’s no reason why they wouldn’t be interested in that credit card.”

Hockey Night in Canada

Scotiabank declined to say how much it spends promoting the sport, which also includes sponsorships of minor hockey teams and Canadian Broadcasting Corp.’s television program ‘Hockey Night in Canada’. The bank spent $282-million on advertising and business development costs last year, according to regulatory filings.

“My single-biggest expense item in marketing is on the hockey strategy,” said Anatol von Hahn, Scotiabank’s head of Canadian banking. “We’re making a big bet here.”

My single-biggest expense item in marketing is on the hockey strategy. We’re making a big bet here

Scotiabank said it can glean information from clients who use its credit cards, such as repayment habits and buying patterns.

“I can start putting you into a segment,” von Hahn said. “I can now come to you and start offering a mortgage, or a mutual fund savings program. Or if you’re buying small-sized jerseys for kids, I now know you have kids – why don’t I offer you an RESP?”

Lifetime Value

Scotiabank’s hockey strategy began in 2007, part of a push to bring younger clients to its domestic bank while cross- selling multiple products. The ScotiaHockey NHL Visa card, started in March, offers reward points redeemable for NHL merchandise and tickets, as well as discounts at hockey-related retailers.

Domestic consumer banking is Scotiabank’s biggest single business segment, with 2011 profit up 5.2% to $1.86-billion. Scotiabank shares have climbed 5.8% this year, close to the gain on the 10-member S&P/TSX Banks Index.

“When you look at where we were seven years ago to where we are in the segment of 18-35, we have gone from net negative — losing customers in that segment — to the strongest growth of all the Canadian banks in that segment,” said von Hahn.

Waugh said NHL commissioner Gary Bettman is among those taking note of the bank’s strategy. Now that Comcast Corp.’s NBC has secured broadcasting rights for NHL games south of the Canadian border, he said the league may seek similar arrangements with U.S. lenders.

NBC

“If you believe NBC is going to put enough resources behind it and push the NHL and try to give it more focus in the U.S. markets, then let’s look at a case of what’s happened in another market; let’s look at the Canadian market,” said von Hahn.

The NHL, which uses Discover Financial Services’s Discover card as its official U.S. credit-card distributor, is “always looking for opportunities,” to partner with banks and insurers south of the border, said Keith Wachtel, the league’s senior vice-president of integrated sales. “It’s not something that necessarily has been one of the priority categories for us next season.”

With no Canadian team left in the NHL playoffs after last week’s defeat of the Ottawa Senators by the New York Rangers, the opportune time for Waugh to hook customers with hockey cards might be winding down. There’s always next year.